HMRC TAX REGIME

The contractor loan scheme is that a freelance or contract worker signs a contract of employment with an employer or employment benefit trust, usually located outside mainland UK jurisdiction. The employer then pays the contractor in the form of tax-free ‘loans’ – which, although appearing as loans on paper, are never expected to be repaid. In return, the scheme provider takes a percentage of the contractor’s income as an ‘administration fee’. Increase in contractor loan schemes, HMRC has taken determining…

UK contractors have two choices when it comes to deciding how to operate. They can either use a PAYE umbrella company or, alternatively, set up their own Limited Company. An umbrella company and a limited company each represent two of the most common business structures that contractors use. But which one is the best option for you? If you choose to be a contractor with your own Limited Company, you’ll need to setup a Ltd Company, and have sole responsibility for your accounts, taxes…

For limited company contractors, saving into a pension remains one of the last tax breaks available and if they want to have a better retirement, these benefits should not be overlooked. We look at all the latest developments and what it means for contractors. Contractors can currently save up to £40,000 per year tax free into their pensions (with a lifetime allowance of £1.25m) The big benefit is that their contributions can be made from their limited company’s income –…

The UK will continue to have a VAT system after it leaves the EU. The revenue that VAT provides is vital for funding public services. The VAT rules relating to UK domestic transactions will continue to apply to businesses as they do now. If the UK leaves the EU without a deal, the government’s aim will be to keep VAT procedures as close as possible to what they are now. This will provide continuity and certainty for businesses. However, if…

The simple answer to your question is YES, you can still get a mortgage based on your contract rate irrespective of whether you operate through your own Limited company or an Umbrella. As long as the Umbrella company that you choose doesn’t operate a “Loan Trust Scheme”. You will typically experience problems if you go to lenders directly or a mortgage broker that doesn’t understand how contractors work. They’re typically geared-up towards salaried employees. This is why we recommend that…

An umbrella company is in simple terms an outsourcing of your payroll. Rather than having the cost and hassle of setting up your own limited company you can work via an Umbrella Company. The contractor would not be a director nor have the responsibilities associated with running a limited company. The umbrella company provider would take care of all accountancy and taxation matters and also deal with all administration matters. The contractor completes a time-sheet and forwards it to the…

‘Inside IR35’ means that you are considered, for tax purposes, an employee of your end client and therefore subject to PAYE. If you are operating ‘inside IR35’, you simply need to ensure you are paying the appropriate taxes, which usually involves a ‘deemed payment’ of income tax being made at the end of the tax year. ‘Outside IR35’ means that you are operating as a genuine business, and therefore operating outside of the IR35 rules. If you are operating ‘outside…

As a contractor in the UK, you may be thinking will Brexit have a positive or negative impression on your job. For now, the job market appears to be still going strong, but this may not remain the same shortly. So, what might Brexit mean for freelancers and contractors? Due to the uncertainty Brexit has caused, it’s unclear how contractors will be affected. However, Britain’s self-employed contributed £271 billion to the economy in 2017; this figure showcases the importance of such an…